Financial Performance practice assessment 1 task 8. Question help please!!

pittuck23

Hi All,

Im struggling with these types of questions - contribution, optimal product mix.
Would someone be able to go through the question for me?

Thanks

Sam

pittuck23

It would probably help if i left the question -
3000kgs avaliable

Tig -
Selling price - 4000
mat - 2400 (£400 per kg)
lab - 400
prod cost - 450
admin cost - 300
prof per unit - 450
Units - 200

Tag -
Selling price - 4950
mat - 3000 (£400 per kg)
lab - 600
prod cost - 450
admin cost - 300
prof per unit - 600
Units -300

Need to know contribution per unit for both, contribution per kg of material.
Optimal product mix

Kkadijat

CONTRIBUTION PER UNIT (TIG)

£4000- (£2400material+£400labour) = £1200

CONTRIBUTION PER KG OF MATERIAL(TIG)
£2400/£400cost per kg= 6KG
£1200/6= 200

SAME PROCEDURE AS ABOVE FOR TAG
And this leave TAG with a contribution of 180 per kg of material HENCE THE OPTIMAL PRODUCTION ORDER will be TIG then TAG . TIG has more CONTRIBUTION compare to TAG

HOPE THIS HELPS

Kkadijat

IN ADDITION TOO ABOVE,

CONTRIBUTION PER KG FOR TAG

4950-3600(MATERIAL & LABOUR COSTS)= 1350/(£3000total material cost/£400 cost per unit) = 1350/7.5 = 180

OPTIMAL PRODUCT MIX

TIG
1200 allocated material/6kg = 200


3000available kgs - (200(CONTRIBUTION FOR TIG * 6KG PER UNIT) = 1800/(3000/400)
3000-1200= 1800/7.5= 240

So OPTIMAL PRODUCTION MIX

TIG 200 and TAG 240

HOPE THIS HELPS